Published in The Australian on 12.09.13
Among the lowlights of the election campaign, few were as low as the two leaders' statements of anxiety about Chinese investment in Australia.
Liberal leader Tony Abbott confirmed a Coalition government would reduce the Foreign Investment Review Board threshold for scrutiny of foreign acquisitions of agricultural land from $248 million to $15m.
Labor leader Kevin Rudd sought to outmanoeuvre Abbott politically from the economic nationalist Right. Both leaders chose to follow public opinion, refusing to accept their responsibility to lead it in the national interest.
Unless China has a massive change of heart, Abbott's decision to cut the foreign investment screening threshold will kill any chance of a free trade agreement between Australia and China stone dead.
As trade minister I had made clear on these pages, in the parliament and at numerous public forums - including several attended by senior Coalition frontbenchers - that China's No 1 demand in the negotiations for a free trade agreement was an increase in the foreign investment screening threshold. No increase, no deal, has been the consistent Chinese position.
For the Coalition to antagonise China - not only by refusing to countenance an increase in the threshold but by cutting it sharply - is the clearest possible indication that an Abbott prime ministership will take the Australia-China relationship backwards.
Not to be outdone, Rudd labelled Abbott's position as too free-market. Rudd went on to describe himself during the remainder of the election campaign as an economic nationalist.
In doing so he effectively repudiated the Hawke-Keating open, competitive model, severing Labor from a proud legacy that had contributed so strongly to 22 years of recession-free economic growth.
A few weeks ago, trade minister Richard Marles visited China to offer an increase in the threshold for private Chinese investment in Australia beyond the existing $248m. By all reports the Marles offer was very well received. But the Abbott-Rudd position has terminated the Marles initiative.
If suggestions that the trade portfolio in a Coalition government would shift from Julie Bishop to Andrew Robb are true, Robb's early burden would be to hear from China that he was wasting everyone's time trying to complete the trade deal. Not only would Robb's northern Australia food bowl proposal be history, so too would the recommendations of the Australia-China joint agricultural study for northern Australia that I initiated and oversaw with my counterpart, then commerce minister Chen Deming.
The decision to announce a cut in the foreign investment screening threshold for agricultural land reveals much about the internal dynamics of the Coalition and who will have the most influence in the Abbott government. Treasury spokesman Joe Hockey had censured his colleague Barnaby Joyce for what Hockey described as "freelancing" on the issue of Chinese investment in Australian agriculture.
Deputy Liberal leader Bishop had repeatedly called for the speedy conclusion of negotiations for the Australia-China trade deal in the full knowledge that Australia's foreign investment threshold remains the major sticking point. Bishop has never supported the Joyce position of lowering the threshold. Robb, Hockey and Bishop are in the same cart. The problem is it's the wrong cart.
Abbott has long supported the Joyce position, telling The Australian's Paul Kelly on Sky News's Sunday Agenda that the threshold should be lowered. And Abbott famously told China on a visit last year that under a Coalition government particular forms of Chinese investment would rarely be approved. Indeed, Abbott has stated that under a Coalition government a free trade agreement with China would be put on the backburner because there were questions about the "extent (to which) China is a market economy".
Abbott's position is the populist one. Country people and city dwellers are anxious about Chinese investment in Australian agriculture. By allowing Joyce to freelance, Abbott has accentuated false impressions that China is buying up large areas of prime agricultural land. The available official statistics suggest that the area of agricultural land that is foreign owned has risen over the past 25 years from 5.9 per cent to just 6 per cent. Only a tiny proportion of that 6 per cent is Chinese investment, the dominant source being the US.
Not to be outdone in the populist stakes, Rudd's repositioning of Labor as a party of economic nationalism could only have been calibrated to pick up votes in regional Queensland and western Sydney. No Labor leader has the right to declare a fundamental shift in Labor's economic philosophy at whim during an election campaign.
That Rudd sought to recast Labor as a party of economic nationalism should be of no future relevance now that he has vacated the Labor leadership. His cynical efforts could be left to historians to assess.
But historians will note that Andrew Fisher served as a Labor prime minister on three separate occasions. Rudd has told three journalists at this newspaper that he wants to emulate Fisher and become a three-time Labor prime minister. He has described himself as a "determined bastard".
When Rudd makes his next run for the leadership, the Labor Party should refuse to cede to him the authority to redefine Labor philosophy in his own image and likeness.